5 reasons to seriously consider Northern Pass

Published: June 3, 2011

The Northern Pass Transmission project proposes to build a new transmission line that will bring up to 1,200 megawatts of hourly electricity and associated electric-generating capacity into New Hampshire and New England from Quebec. That is approximately equal to the energy production capacity of the Seabrook nuclear power plant.Unfortunately, while there has been concern expressed about the project's route and its aesthetics, there has been very little attention paid to the specific benefits the project will deliver to New Hampshire and New England and why this project is "needed."Here are five specific reasons that it should be given serious consideration by the New Hampshire public and policymakers.First, electricity on the Northern Pass will be sourced from Quebec's predominantly low-carbon, hydroelectric system. The energy will be competitively priced when compared to New Hampshire and New England's existing energy resource mix.Because of this, it will displace other, more expensive and higher-carbon emitting sources of electricity. The reduction in carbon emissions projected from the Northern Pass project is significant and is equivalent to taking nearly 900,000 cars off the road annually.Coal and oil power production are on the decline here in New England, but another fossil fuel source - natural gas - powers nearly 45 percent of the electricity consumed in New England today. Natural gas also contains carbon. Although not a high probability today, if a moratorium on shale gas extraction is enacted in the future, it will have substantial implications for natural gas prices in the region.Second, unlike other energy transmission projects that are seeking guaranteed consumer subsidies, Hydro-Quebec has committed to financing all capital and operating costs of this transmission project. As a result, there will be no direct investment risk for New Hampshire or New England electric consumers.Third, although most consumers are not aware of the fact, the New England wholesale power market is a fully integrated one that spans across state borders, covering six states. Lower power prices in Massachusetts, for example, as a result of lower demand or the introduction of low-cost generation, drives down the price of electricity in all the other New England states. But, in addition to such spot market price benefits and regional environmental benefits, Northern Pass will also create local economic benefits for New Hampshire, in terms of more construction jobs and property tax revenues.Fourth, Northern Pass provides insurance against "game-changing" events that could lead to higher electricity costs for consumers. These game-changing scenarios include unforeseen events like a shortage of natural gas or gas delivery constraints and resulting spike in prices as outlined above. They also include a natural disaster that takes down a major power plant, as recently occurred in Japan; the retirement of aging oil and coal fired plants; or the closure of one of the region's nuclear power plants. New England has an aging fleet of power plants and more than 14,000 MW of capacity - 46 percent of the current supply base in New England - is at some risk for retirement.Finally, Northern Pass will improve the reliability of electricity service in New Hampshire and New England by increasing and diversifying the supply of power to the region.There are clear and substantive benefits for New Hampshire residents if Northern Pass moves forward. The cost-benefit proposition is very compelling, confirming the need for this project from the New Hampshire consumers' and policy makers' perspective.Julia Frayer is managing director of the Boston office of London Economics International, a global economic, financial and strategic advisory professional services firm specializing in energy and infrastructure.

This article appears in the June 3 2011 issue of New Hampshire Business Review